Being the Bad Cop

This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any.  Dave is from Ontario and is working towards his CGA certification.

Sometime in the middle of the 40+ hours of studying for a taxation exam I wrote last Thursday I gained a roommate.  My sister moved cities and is now living with my wife and I for the foreseeable future as she can’t afford to live on her own due to her finances (debt) being out of control.  It seems that in the couple of years since she got out of college she has managed to rack up a considerable amount of debt, to the point that living by herself at and being able to eat is now a choice between the two.

So, I have essentially become a “parent” to a 24-year-old girl.  From a financial perspective, it is most definitely not ideal because of the extra cost of supporting another person.  It’s nice hanging out with my sister, since the last time we lived together was when she was 11 and I was 18, which meant we really didn’t have much in common, so we have a chance to connect now as adults.

Due to her financial state and the fact that she is now living for free in my house we have essentially taken over running her finances, mostly through setting up “rules” that we expect her to follow.  If she doesn’t follow the rules, we’ll give her a couple of months to get first and last month’s rent and she is welcome to live her life how she would like.

So, what are the rules?

1) Pay off the debt as quickly as possible.  We looked at her monthly expenses, her wages at her current job, and her debt.  We gave her $50 a month to spend on whatever she wanted and told her to the rest needed to go to pay down her debt.

2) Follow Up on progress. We told her that we would like to see a copy of her pay stub and credit card statement to ensure that she was doing what she said she was doing…..We figure if we are going to be supporting a roommate we would like to ensure that she is carrying out her end of the bargain.

3) I’m not the bad cop. Not really a rule, but we explained that we weren’t the bad guys here.  What we are intending to do is to help her get out of debt, an opportunity to start fresh – we would prefer that she takes it and not resent us for being the “heavy” in this situation.  I’m sure at some point she will, but we thought we would discuss it prior to it happening.

So far (it’s been a week) the arrangement has been agreed to, I’m not sure how it will go over the next year or so she will be staying with us, I guess we’ll have to see.  My wife and I understand that someone who has lived with very little financial structure or discipline this will be a big change, but we hope she makes the most of the opportunity.

Have you helped a family member out before?  How did it work out?

12 thoughts on “Being the Bad Cop”

  1. Yikes. I wish you well. I haven’t personally taken on such an onerous task but have watched others do it. It really could go either way, depending on your sis’ willingness to change. I had a sibling who still exists as a spendthrift despite my father’s clear, consistent financial guidance through our lives. The message stuck with me but my sibling saw unfairness, lack of support, blah, blah.
    Is there an objective party (banker, lawyer) who can also advise? Since you haven’t connected in years perhaps your role is better suited to big, loving brother instead as finance cop.

  2. I tend to agree with M. It could really be life changing for her – but it could also scuttle your new-forming relationship. She’s lucky to have you to help her for sure. But if she’s not personally ready to make the financial shift on her own terms, I suspect she’ll grow resentful and annoyed. It’s one thing to struggle with a plan you made for yourself and really believe in – it’s another to struggle against someone you see as controlling you or forcing you to do something (even if it’s for your own good).

    If your sister wants to do this for her own reasons, you won’t ever need to be the heavy – when she slips up you can be supportive and share your wisdom and boost her back on track. But if you find yourself policing her or fighting about money, then that probably means she’s doing it to comply with your demands and that has obvious repercussions for your relationship.

  3. Dave, first I think you’re being a great big brother – it’s like an episode of Intervention! 🙂 My oldest sister pushed me a bit years ago in my teens and I’m grateful to her for it.

    Second, if I were her, I’d figure out pretty darn quick that the way to get myself out of the situation faster or to actually have more spending money that you couldn’t dictate would be to pick up a second job.

    I wouldn’t discount her ability to make massive changes in her approach to finances since she’s at the age where the brain has developed to understand long term consequences of behavior. It wasn’t until the last 6 months or so that I saw the same thing happen in my 23 yo son. Right now, he’s living off of his $800/month income from his 20 hour a week job and banking his whole (much higher) full-time job income. In the beginning he was giving the money to me as his bank so that he wouldn’t touch it but he’s graduated to having another bank account at a bank across town. None of this was my idea though, he figured it out on his own.

    Any other time I’ve helped (by enabling) anyone else, it hasn’t ended well. So I think the structure you’re providing is a good thing.

  4. Wow Dave, that is a lot for you to take on… This will no doubt be a trying experience not just for your sister but for you and your wife as well. I’m thinking you could start your own blog series “My Sister’s Financial Rehab” Because I guarantee you that this little social experiment will provide you with a ton of “reality TV show” type material to write about…. I’m already looking forward to the next update 🙂

  5. Tough love at its finest.

    I’ve been “supporting” my older brother for years, even though he usually made more than me (I have caught up to him in recent years). He is currently renting my condo that I bought eight years ago, although the rent has not been steady.

    I don’t even want to think about the amounts of interest on my own debts I’ve had to pay because he chooses to pay me back whenever he pleases over the years. I haven’t lent him direct money in years but he can still affect my finances through lack of rent.

    My wife and I want to move to a house so I’ve told him to move so I can sell my condo and upgrade. Somehow he believes he can buy a place. I wish him luck, but I just look forward to the day where I’m not tied to him financially anymore and ever again, even if he takes one more pound of flesh out of me before that happens.

    Your story is a much better one.

  6. Good on ya mate, that’s a big responsibility you’ve taken on and I sincerely hope it works out for all parties concerned.

    I would add two more ‘rules’ to the mix.

    One is a cost of living expense – food and shelter – payable to you on a monthly basis, which at the end of the exercise you can rebate as a “bonus” if you wish. The expense doesn’t have to be “actual” but nor should it be trivial – maybe it should reflect 50% of real cost. What this adds to the mix is a reality – i.e. there is no free lunch (and room) and one is responsible for one’s own existence. You are giving her a hand up not a handout.

    Second “rule” would be to have a mutually agreed upon end date or at least a reassessment date. Again real life has deadlines (even though they are often ignored) and subsequent consequences.

    I had arrangement similar to what you describe recently with a daughter of a close friend ( an “almost daughter” to me) and the results were gratifying. She launched into her own apartment with a much greater appreciation (I think) of the realities.

  7. Been there, done that, hope it goes well.

    In 2007, my 55-yr-old sister (she’s 10 years older than I am) landed on my doorstep after her daughter(!) threw her out. She’d driven down to Portland from Spokane with no place to stay since her house had been forfeited in 2006. A lack of a functioning thyroid had contributed greatly to her decline.

    We set up some guidelines and provided for her while she got back on her feet financially. Unfortunately, in her desire to lead an independent life, she moved out before we felt she was ready. Sure enough, she lost her job less than a month later, in January 2008.

    Her next job was a miserable phone survey job which she lost by August 2008. She’d picked up a homeless coworker as a roomate and together they came up with a plan for her to go to college and get a degree, “so she can find a good paying job that she can feel good about doing”… consequently, she now has a bachelor’s in Judaic Studies and is working on a master’s in family counseling.

    All well and good, but she continues to avoid taking a job to finance this endeavor and insists that her family is supposed to support her financially. Naturally we continue to decline the opportunity since she blew through a $30,000 student loan in 1 year (on top of financial aid).

    She’ll be 60 when she graduates, no recent work history, at least $50k in debt, and still not emotionally/physically prepared to work a full-time job. The challenge will just be keeping her out of a homeless shelter.

  8. My advice is to focus on her positive accomplishments on her road and not nitpick the small mistakes (ie. extra expenditures). If she sees you and your wife as supportive figures she will have a greater a chance of success. Plus, if you refrain from passing judgment on a day-to-day basis it will be more likely that she will listen to you when you actually choose to voice your concerns.

  9. All of the goals you listed were listed as your goals, not your sister’s goals. Prepare yourselves for the likelihood that she may not be ready for the austerity plan and may indeed see you as the bad guy in this.

    A fourth goal might be to find somewhere for the two of you to connect that has nothing to do with money. You will have something to fall back on when this arrangement hits bumps.

    Your sister is young so who knows what her financial patterns will ultimately be. It is almost guaranteed that they won’t be exactly as yours are. My sister is 48 and we are vastly different in that area. We do have things in common that we share, just not a love for saving and investing.

  10. I did that to my Mom! Yes, my mom! I have to tell her that I was ready to retire too and that I might not be able to support her spending (she buys a lot of stuff for me!) and we are all fine now:-)

  11. I think you have implemented a great and fair plan. Like some of the other posters above, I feel that some siblings could look at this as a negative “control” plan. But you will soon find out if you are being helpful or being had.

    I must congratulate you for being tough and doing this. Many people would just hope for the best but then the arrangement would wind up failing.

  12. Isn’t it interesting that a pair of siblings with (what one would assume – maybe a bad assumption) likely a similar upbringing have such different attitudes towards money? As some of the comments on here are saying Dave, I don’t think this will be an easy situation. I definitely don’t envy you, but I do admire your sense of responsibility (and guiltily look forward to updates). I would say the task would be exponentially easier if your sister was still in high school, or even university where she would still have been relatively influence-able. As a 24-year old adult…yikes. Good luck man, special place in heaven for some people…

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